Foreign entrepreneurs lead the way on small businesses

Small and mid-size businesses in Russia generate about 15% of national income - compared with 80% in the U.S. But some foreign entrepreneurs have started businesses in Russia and achieved success - despite the crisis.

Alexander Bolker-Hagerty and his partners have launched a fast food store and it is making more than 100 sales per day only a month after opening. He says that despite the economic downturn there are still customers looking to dine out.

"During this crisis we have been in, and we still might still be in, people still want to go out and eat. But they want to eat smaller portion and for less.”

It took Alexander more than 6 months to establish a shop of 30 square meters. It would have taken half that time in Europe he says

"It’s nothing like what it is in the west. There are more barriers, which take more time, which involve more people, which make things more complicated."

James Baxter opened a deluxe hotel in the heart of Moscow just as the crisis began. Now its 10 rooms bring more money, he says, than his friend’s hundred room hotel in London’s Noting Hill.

“There is massive opportunity for Russians and for foreigners to do business in Russia. Culture of entrepreneurship doesn’t exist to the same extent as it does in Europe or certainly in the United states. There is a lot more opportunity for people who are willing to take the risk.”

Businessmen say, while taxes are not a heavy burden in Russia – red tape and corruption are real drags. Since the law protecting small firms from excessive administration was launched in July, the number of health, fire and police inspections by has fallen 20 times. As for the remaining checks, foreign businessmen find they are sometimes better than Russians at dealing with it.